Pake selected Palo Alto, California, as the site of what was to become known as PARC. While the 3,000-mile buffer between it and Xerox headquarters in Rochester, New York afforded scientists at the new lab great freedom to undertake their work, the distance also served as an impediment in persuading management of the promise of some of their greatest achievements.

PARC's West Coast location proved to be advantageous in the mid-1970s, when the lab was able to hire many employees of the nearby SRIAugmentation Research Center (ARC) as that facility's funding began falling, from the Defense Advanced Research Projects Agency (DARPA), National Aeronautics and Space Administration (NASA) and U.S. Air Force (USAF). Being situated on Stanford Research Park land leased from Stanford University[8]allowed Stanford graduate students to be involved in PARC research projects and PARC scientists to collaborate with academic seminars and projects.

Much of PARC's early success in the computer field was under the leadership of its Computer Science Laboratory manager Bob Taylor, who guided the lab as associate manager from 1970 to 1977 and as manager from 1977 to 1983.

After three decades as a division of Xerox, PARC was transformed in 2002[7] into an independent, wholly owned subsidiary company dedicated to developing and maturing advances in science and business concepts with the support of commercial partners and clients.

PARC's current work is centered around a series of Focus Areas which include: Artificial Intelligence (AI) and Human-Machine Collaboration; Digital Workplace; Novel Printing;Internet of Things (IoT) and Machine Intelligence; Digital Design and Manufacturing; Microsystems and Smart Devices.

Most of these developments were included in the Alto, which added the now familiar Stanford Research Institute (SRI) developed mouse,[10] unifying into a single model most aspects of now-standard personal computer use. The integration of Ethernet[6] prompted the development of the PARC Universal Packet architecture, much like today's Internet.

Xerox has been heavily criticized (particularly by business historians) for failing to properly commercialize and profitably exploit PARC's innovations.[11] A favorite example is the graphical user interface (GUI), initially developed at PARC for the Alto and then commercialized as the Xerox Star by the Xerox Systems Development Department. Although very significant in terms of its influence on future system design, it is deemed a failure because it only sold approximately 25,000 units. A small group from PARC led by David Liddle and Charles Irby formed Metaphor Computer Systems. They extended the Star desktop concept into an animated graphic and communicating office-automation model and sold the company to IBM.

PARC's developments in information technology served for a long time as standards for much of the computing industry. Many advances were not equalled or surpassed for two decades,[citation needed] enormous timespans in the fast-paced high-tech world.

While there is some truth that Xerox management failed to see the potential of many of PARC's inventions, this was mostly a problem with its computing research, a relatively small part of PARC's operations. A number of GUI engineers left to join Apple Computer. Technologies pioneered by its materials scientists such as liquid-crystal display (LCD), optical disc innovations, and laser printing were actively and successfully introduced by Xerox to the business and consumer markets.[12]